The Dominion. THUESDAY, AUGUST 25, 1910. THE FINANCIAL OUTLOOK IN AMERICA.

Dominion, Volume 3, Issue 904, 25 August 1910, Page 6

The Dominion. THUESDAY, AUGUST 25, 1910. THE FINANCIAL OUTLOOK IN AMERICA.

Two very interesting, and, as it now turns out, very important and significant, cable messages appeared in the papers last week. The first consisted of an extract from an editorial in which the London Times referred to I the general consensus of business opinion in the United States that therq has been "an excess of optimism" since the summer of 1908, when the heavy clouds of the 1907 panic rolled out of the financial sky. "Financiers are uneasy," said the Times, -"owing to the increase.of the railways' foreign indebtedness, and tho surprising frivolity of the farmers and citizens of the Western States, who, intoxicated by high profits, have not only locked up their resources in bricks and mortar, but have also .got a craze for automobiles." The second message, beginning like so many of the cable items, very exasperatingly in the middle of events, reported that "the protest against the present extravagance and optimism in the United States continues. I .'. It was mentioned, as a-striking y instance of luxurious extravagance, that" the works of art imported ' into tho States during 1909 were valued at 21,000,000 dollars, a sum three and a half times as great as the highest previous figure. Bankers and financiers, the message went on to say, were protesting particularly against the motor-car craze, tho intensity, of which is measurable, by the fact that the people of Kansas alone have sunk £6,000,000 in automobiles. . It is obvious that the panic ended too suddenly, and was succeeded by too great a burst of. prosperity. The Administration, as we have recorded in past articles, has been wise enough to refrain from what the Administration in this country regards as its first duty, namely, the stimulation of the mood of boom and squander. On the contrary, it has been doing a good deal in tho way of saving money. . This week's mail brings us, evidence that there is something more in the minds of far-seeing : Americans than sorrow at the blossoming of "optimism" into riotous extravagance. Mr, Thomas B. Walker, known throughout America' as the "White Pine. King," publicly stated last month his belief that the United States is on the ,verge of the worst panic it has ever known. • It will come within four years, he thinks, and it may come next year. He bases his fears on the heavy balance of trade against the United' States, which is made up not only of the excess of imports over exports, but of money spent by American travellers abroad and by other charges, which he estimates at £160,000,000 annually* Mr. Walkek is not alone in his anxiety, as the Washington correspon'dent of tho London Morning Post records in a message published on July 15 last. .. "Tho financial conditions," says tliis correspondent, "are causing", uneasiness in several quarters. The 'New York Heralo.' is making valiant attempts.to convince tho. public that the country is prosperous , , arid' that recent heavy breaks in tho stock market havo been duo to tho concerted attacks of 'bears' in London, Paris, and other European financial centres,, but especially in London, with the object ' of bringing about iv fall from their profit— an explanation that strikes the average person as eminently in keeping with the weathor and season. Whatever the cause,, tlie fact remains that after every temporary rally the stock market makes a new low record, and shows no power to resist the professional operators, who are always quick to seize an opportunity to depress tho prices, of securities."

Nobody questions the fundamental soundness of the State, just as nobody questions the greatness of the resources' of. New Zealand, but in every.country prudence on the part of the Government and tho people is a necessary condition of prosperity. America there is quite as much'cause for disquietude as, so those who ought to know have been telling us, exists -in New Zealand. The factors in the anxiety. that is spreading, in America are numerous and important: the impending decisions of the Supremo Court in the Tobacco Trust and Standard Oil cases; the insistent; demands of Labour for increased wages; the refusal ■ of the Administration and the Inter-State Commerce Commission to permit the railways to advance their freight rates unless the fullest justification can be shown to warrant the increase; uncertainty as, to crops; the,fear of a Democratic victory at the next election; the wild speculation that has been in progress for months in western lands; the craze to possess automobiles, "which has led many persons to mortgage their homes to purchase machines"; and, finally, a "lurking fear that international relations are not as cordial as might be wished." Here, it will be seen, are a variety of forces at work, of which more than one is of itself able to precipitate tho collapse of a prosperity which is eaten into by waste. True and sound prosperity differs from a boom as the glow of health differs from the hectic flush of fever. In a country like America a rapid and continuous rise in tho cost of living is evidence of waste—of. consumption outstripping production. The, stoppage of any of the normal currents of trade and exchange, in a community in which waste on a large scale is going on, must produce disaster. New Zealanders have good reason to' remember that their country is not,beyond the zone of influence of a financial crisis in America, although tho Prime Minister almost shouted himself hoarse in maintaining, as long as he coulcT, that New Zealand is unaffected by the storms of the older world. Everybody will therefore hope very earnestly that the counsellors of prudence will succeed in America. And in tho meantime it is the part of wisdom to insist that, our Government shall not act as if tho panic of. 1907 can never bo repeated.